Let's Talk No Compete Agreements

[jayjohnson600]

We had a sales guy come over from a competitor. I guess he signed a NC over there and forgot about it?

Anyway, one day about 6 months later he was gone.

Turns out his old employer found out where he went, called here, and basically said, "that guy misreprsented himself" (or something to that effect). Rather than drag it out, fight it, or whatever else he was let go to save everyone the trouble.

This is actually against the law.
If the employee could prove this communication and he was fired by the current employer(not quit), he could hammer both employers
But, I know this occurs quite a bit.

[Strychnine]

This is actually against the law.
If the employee could prove this communication and he was fired by the current employer(not quit), he could hammer both employers
But, I know this occurs quite a bit.

Yeah there's probably more to it than what I know.

I was in the field when it happened. Caught the story later via the grapevine.

[Silverback]

This is actually against the law.
If the employee could prove this communication and he was fired by the current employer(not quit), he could hammer both employers
But, I know this occurs quite a bit.

Not really. If a non-compete exists a company can call and notify the other company. I'm sure the misrepresentation Matt is talking about is that he never mentioned his non-compete.

Basically Brent the answer is tell him to sign it if his job is in jeopardy, but not to worry too much about it. He has every right to seek employment with a competitor, but if the previous company finds out he solicited their clients they can sue him. Other than that, there isn't much they can do. Typically a non-compete at that level is a fear tactic.

Even when my dad sold his title company and had a 5 year non-compete, several attorneys contacted him to start up another title company as they wanted to partner with him. They all said they would take care of the non-compete for him in court ant it wouldn't take much longer than a couple of months tops.

[Butch]

Most companies won't pursue it. Maybe an IT company but for a salesman to switch jobs, it's highly doubtful anything would come of it.

[no4njnk]

Yeah I had to sign one when I started outside sales. It sucks if I ever want to leave but I could always get a job with one of my customers for awhile. Would be a huge paycut though, a few have offered me jobs and it was significantly less.

Just have a lawyer review it and sign in. May cost money now but save a lot later.

[S_K]

These agreements are pretty much worthless in the IT field. Unless they can prove you stole intellectual property - you have no worries.

The only thing I have seen stick is when a person works for a contracting agency. Business hires temp employee from agency and decides to keep him. In this case the business has to compensate the contracting agency for the loss of employee. This is why most temp agency contracts have a "right to hire" clause in them.

[Silverback]

These agreements are pretty much worthless in the IT field. Unless they can prove you stole intellectual property - you have no worries.

The only thing I have seen stick is when a person works for a contracting agency. Business hires temp employee from agency and decides to keep him. In this case the business has to compensate the contracting agency for the loss of employee. This is why most temp agency contracts have a "right to hire" clause in them.

That isn't really a non-compete, it's just a standard part of the contracting agreement.

[S_K]

I agree, totally different. But I had a fly-by-night employement agency try to strong arm me out some money. I hired a guy who was working temp at another company - no affiliation. The agency had made the guy sign a no-compete clause that he couldn't work for anybody until they released him. Therefore I had to pay them a fee to employh him. Told them to get bent. However, if the guy had not been a stellar employee, I would have let him go so I would not had had to deal with the hassle.

[Gear_Jammer]

Hopefully Gear Jammer can provide more insight, but I don't think he has anything to do with employment laws.

Actually, I have a fair amount of knowledge/experience in employment law. It's not something I do on a regular basis, but I try to keep up with when I can. I'm about to leave the office to go to dinner, but PM sent. I will say that the Texas Supreme Court decided a case that made some huge (employee-friendly) changes in what is and what isn't enforceable when it comes to non-competes.

[32vfromhell]

I think the big problem is they want him to sign one after his at-hire compensation negotiations.


If I were him, I would tell them I would sign it after we renegotiate my compensation, otherwise I will not be signing it. Just my experience from hearing about this often in the Medical Services Industry, where companies pull this shit all the time, where they try to poach other companies reps who they like, and threaten their own for being poached.

[Roscoe]

Actually, I have a fair amount of knowledge/experience in employment law. It's not something I do on a regular basis, but I try to keep up with when I can. I'm about to leave the office to go to dinner, but PM sent. I will say that the Texas Supreme Court decided a case that made some huge (employee-friendly) changes in what is and what isn't enforceable when it comes to non-competes.

Sorry to bump an old thread, but would you mind sending me the same PM?

I've done a lot of research on non-competes as being in outside software sales, they are very common, albeit empty threats in most cases.

I do know there are several ways to defend yourself should it go to court, if you can prove several things - ie: previous employer acted in bad faith, unclean hands, etc.

A judge will never side with a company that is going after Joe-Blow Sales Guy from making a living. I'm actually treading cautiously right now as my previous employer is chomping at the bit to know where I went, and they have suspicions I went to a direct competitor and have threatened others in the past...

We'll see how it goes, but based upon my information, they aren't worth the paper their are written on. BTW - all the ones I have ever signed were 12 months. 2 years is a joke, unless they were a CXO that had highly confidential information, and even then it would be questionable...

[red95gts]

I know a guy who signed a NC and eventually left for a competitor (both in TX). The NC was eventually thrown out in court, but not before the poor guy spent $15K in legal fees that were never recovered. While they may not be able to enforce the NC, the company typically has a bigger legal budget than the employee does and can make life pretty miserable if they want to....

[Roscoe]

Sorry to bump an old thread, but would you mind sending me the same PM?

I've done a lot of research on non-competes as being in outside software sales, they are very common, albeit empty threats in most cases.

I do know there are several ways to defend yourself should it go to court, if you can prove several things - ie: previous employer acted in bad faith, unclean hands, etc.

A judge will never side with a company that is going after Joe-Blow Sales Guy from making a living. I'm actually treading cautiously right now as my previous employer is chomping at the bit to know where I went, and they have suspicions I went to a direct competitor and have threatened others in the past...

We'll see how it goes, but based upon my information, they aren't worth the paper their are written on. BTW - all the ones I have ever signed were 12 months. 2 years is a joke, unless they were a CXO that had highly confidential information, and even then it would be questionable...

aaaaaaaaand I just got hit with a letter from my previous employer's lawyer stating I'm in violation of my non-compete and "my employment with [current employer] is a violation of the Agreement and [former employer] is prepared to take any and all steps necessary to protect its legal rights."

We'll see what happens, but all I can say is I never should've worked for a fucking NY based company. Buncha cocksuckers....

They also sent a very similar letter to my current CEO stating [I]" am prohibited from being employed by [current employer] by his contractual obligations to [former employer]."

[Big A]

Well that blows. Keep us updated on how it turns out, hopefully it's just the usual empty threat. Did you take existing business with you to the new employer?

[Roscoe]

Well that blows. Keep us updated on how it turns out, hopefully it's just the usual empty threat. Did you take existing business with you to the new employer?

Will do.

Not a single bit cent, or even an opportunity.